State and private companies from Saudi Arabia have been boosting their outbound campaigns as investment becomes the country’s favoured tool for soft power in the Middle East and Islamic world.
Foreign investment from both state-owned and private companies in Saudi Arabia totalled a record $22.6bn in the first 11 months of 2022, up from $2.2bn over the same period in 2021, according to fDi Markets. The Public Investment Fund (PIF), the country’s sovereign wealth fund, deployed $20.3bn in 2022 — up by 448.6% from a year earlier, research from Global SWF has found.
Strategy change
These rising levels of foreign investment signal a change of tack in the way Saudi Arabia uses its financial resources to increase leverage over the region, and the Muslim world as a whole.
Mohammed al-Jadaan, the Saudi finance minister, said that the country was “changing the way we provide development assistance”.
“We used to give direct grants and deposits without strings attached and we are changing that. We are working with multilateral institutions to actually say we need to see reforms,” he said on January 18.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, says that this is in line with the government’s objective to play a more developmental role. “Saudi has been shifting its aid in the region to be more reforms-led. It’s no longer ‘no strings attached’; they need to see results,” she points out.
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